BP2 / FINANCE, PROFIT + INFRASTRUCTURE Games Monitor [ Briefing paper on London 2012 Olympic Games ] Games Monitor, December 2015 (fifth edition) – replacing previous background papers and extensively revised Other papers in the series: BP 1 / LLV impacts + beyond BP 3 / Apparatus (state + media) http://www.gamesmonitor.org.uk/contact_media_centre Games Monitor was founded in 2005 to raise awareness on issues around the London 2012 development process. We can be contacted at [email protected]. Questions on the background papers specifically should be addressed to Carolyn Smith [email protected]. CONTENTS 1. Funding, taxes and false hopes 7 1.1 Proliferating expenditure and deceptive accounting 7 Juggling figures in Whitehall LDA mismanagement Impacts of 2008 crash Regional effects Diversion of local authority finance London council taxes Utilities bills Costs of previous Olympic events Budget overruns on Stratford venues 1.2 Impact on London’s visitor economy 11 Local trading 2. Profiteering and speculation 14 2.1 Property speculation 14 Compensation payouts on land Speculative investment 2.2 Construction economy 16 2.3 TV rights, brand protection and sponsorship 17 Broadcasting rights Brand protection Commercial sponsorship AdiZones 2.4 Sponsorship controversies 20 Dow Chemical ArcelorMittal Other dubious sponsors UK Bribery Act 2010 Contesting copyright 2.5 Ticketing 22 2.6 Olympic pay and bonuses 23 3. Infrastructure overload 24 3.1 Rail upgrades 24 Rail Future recommendations Channel Tunnel Rail Link/Javelin service North London Line East London Line Shenfield Line London Overground Thameslink Chiltern Line Crossrail 3.2 Olympic Route Network 26 3.3 Energy and data capacity 26 4. Legacy arrangements (Stratford precinct) 27 4.1 Legacy responsibilities 27 4.2 Venues 27 Finding a future tenant for the main stadium Objections by cyclists to legacy provision 4.3 Other infrastructure 29 Media centre ArcelorMittal Orbit Thames cable car Mobile phone networks on the tube 4.4 Housing 30 4.5 Questions surrounding the park 31 5. Paying for an elite 33 5.1 Financing elite athletes 33 5.2 Sportswear is a sweatshop industry 33 Labour conditions of flexible specialisation Prelude to Beijing 2008 Sweatshop labour and London 2012 Bibliography 37 Dedicated to the memory of Katy Andrews 1958–2015 The motion of the shadowing clouds / is felt right down in the earth. / When late-summer days cloud over / the ground cools to the chill of a cellar. / The grass around us darkens before it yellows. / The wellspring sharpens its iron taste. (From Chickweed Wintergreen by Harry Martinson [Tarset: Bloodaxe Books, 2010]) ACRONYMS Common to all background papers. ABAC Association of British Athletics Clubs ACPO Association of Chief Police Officers AI Amnesty International AOTU Art on the Underground ASA Amateur Swimming Association ASBO Anti-social Behaviour Order ATCSA Anti-terrorism, Crime and Security Act 2001 BCCLA British Columbia Civil Liberties Association BOA British Olympic Association BOCOG Beijing Organising Committee for the Olympic and Paralympic Games BTCV British Trust for Conservation Volunteers C6/C7 Sixth century/seventh century etc CABE Commission for Architecture and the Built Environment CARP Carpenters Against Regeneration Plans CBC Canadian Broadcasting Corporation CCHP Combined cooling heat and power CCTV Closed-circuit television CLM Consortium managing London 2012 construction: CH2M Hill (environmental evaluation), Laing O’Rourke (construction), Mace (project management) CLO Community legal observer COHRE Centre on Housing Rights and Evictions CPET UK Central Point of Expertise on Timber CPO Compulsory Purchase Order CSIS Canadian Security Intelligence Service CSJ Centre for Social Justice CTRL Channel Tunnel Rail Link DCLG Department for Communities and Local Government DCMS Department for Culture, Media and Sport DDOS Distributed denial of service DLR Docklands Light Railway DPU Development Planning Unit (UCL) ECJ European Court of Justice EDAW Consultancy, now part of AECOM, responsible for Olympic masterplanning EIC Environment Industries Commission ELL East London Line EU European Union FA Football Association FIFA Fédération Internationale de Football Association FOI Freedom of information GMB General Municipal Boilermakers and Allied Trade Union GLA Greater London Authority JPAT Joint Planning Authorities Team HCA Homes and Communities Agency HLF Heritage Lottery Fund HMUG Hackney Marsh User Group IOC International Olympic Committee ILO International Labour Organisation IT Information technology IWW International Workers of the World LBH London Borough of Hackney LBN London Borough of Newham LBTH London Borough of Tower Hamlets LBWF London Borough of Waltham Forest LCR London and Continental Railways LDA London Development Agency (1999–2012) LGTU London Gypsy and Traveller Unit LED Light-emitting diode LLDC London Legacy Development Corporation (2012–) LLV Lower Lea Valley LLW London ‘living wage’ LOAR London Olympic Association Right, dates from London Olympic Games and Paralympic Games Act 2006 LOCOG London Organising Committee for the Olympic and Paralympic Games (2005–2014) LRO Legislative Reform Order LRRA Legislative and Regulatory Reform Act LTGDC London Thames Gateway Development Corporation LVRPA Lee Valley Regional Park Authority MDC Mayoral development corporation MGS Manor Gardening Society MLBG Marshgate Lane Business Group NAPO Formerly the National Association of Probation Officers NEF New Economics Foundation NLL North London Line NLLDC New Lammas Lands Defence Committee NMP Newham Monitoring Project NOGOE No to Greenwich Olympic Equestrian Events NRF Neighbourhood Renewal Fund NRMM Non-road mobile machinery NSNO No Second Night Out (homelessness initiative) ODA Olympic Delivery Authority (2006–2014) ODPM Office of the Deputy Prime Minister OLD Olympic Legacy Directorate, part of the LDA OPLC Olympic Park Legacy Company (2009–2012) ORN Olympic Route Network PwC PricewaterhouseCoopers RSL Registered social landlord SMEs Small and medium-sized enterprises SOCOG Sydney Organising Committee for the Olympic and Paralympic Games TFL Transport for London TMA Team Member Agreement TMO Tenant management organisation TUC Trades Union Council UAV Unmanned aerial vehicles UCATT Union of Construction Allied Trades and Technicians UCL University College London UEL University of East London UPPs Pacifying police units (Brazil) US United States VANOC Vancouver Organizing Committee for the Olympic and Paralympic Games WFSGI World Federation of the Sporting Goods Industry 1. FUNDING, TAXES AND FALSE HOPES Just like Pepsi setting up a bottling factory in India, people needing new jobs and urban improvement want to believe the promises that the Olympics seems to offer. Just like other multinationals, governments are willing to tempt the Olympic business to their countries by offering public funds to pay its enormous infrastructure costs. Kevin Blowe (2005). ‘Bidding for disaster’, Radical Activist Network newsletter, spring edition 1.1 Proliferating expenditure and deceptive accounting – Juggling figures in Whitehall Government calculations for the total 2012 budget, finalised at £9.325 billion in March 2007, were challenged by Andrew Gilligan in the Daily Telegraph on November 7, 2009. Gilligan charged that the total budget figure ‘substantially understate[d] the true position’. The paper’s journalists had discovered a further £2.7 billion of direct funding for the Games and Games-specific projects. These extra costs included (verbatim): £1.15 billion spent by the London Development Agency (LDA) to buy and decontaminate the Olympic park area; a further £359 million not publicly announced by LDA, including £269 million in interest payments and £90 million in Olympic grants; £389 million for Games-specific transport improvements by Transport for London (TFL) and Network Rail; about £60 million costs for Whitehall departments working on Games preparations and legacy planning; £240 million spent, or bid for, by local councils; a contribution of £110 million by the Homes and Communities Agency towards the costs of the athletes’ village; £280 million on Olympic-related grassroots and elite sports projects; and almost £100 million in direct Games-related spending by a range of other public bodies, from the Lee Valley Regional Park Authority (LVRPA) to the Arts Council and National Health Service. This took the estimated total cost of London 2012 to £12 billion, a figure six times higher than the original forecast of £2.05 billion given in the original bid document. In his article, Gilligan quoted Hugh Robertson, then shadow sports minister, who described the notion of an Olympic budget as ‘an extraordinarily misleading term’. Robertson believed that even the £12 billion figure would prove a substantial underestimate. It is not clear from media reports whether this figure included the projected cost of Olympic security (£1.5 billion) (see BP3 §1.1). Even before the March 2007 announcement, The Times (Sherman and Goodbody 2006) calculated a far higher figure than initial bid estimates: around £10 billion. Hidden costs included £1 billion for regeneration of the Lower Lea Valley (LLV), a 60 per cent contingency reserve proposed by the Treasury (these two items taking the total to £7 billion), security costs, VAT and monies for decontamination (another £1 billion) plus running costs of the event itself, expected to be raised from private finance and sponsorship (generating an extra £2 billion and expected to rise).